Question: Macroeconomics need answers thx. Consider a. representative rm that exists for two periods and has the following production technology Y = anNl' and i =

 Macroeconomics need answers thx. Consider a. representative rm that exists for

Macroeconomics need answers thx.

two periods and has the following production technology Y = anNl'\" and

Consider a. representative rm that exists for two periods and has the following production technology Y = anNl'\" and i\" = z'K'w'l-, where Y and Y' are the current and future outputs; z and z' are the current and future total factor productivity (TFP); K and K' are the current and future capital stock; and N and N ' are the current and future labor inputs. The law of motion for capital stock is K'=I+(1d)K, where, I is investment emd d is the depreciation rate. Let to and ul' denote the real wage rates in the current and future periods. Let 11' = Y wN I and 11'i = Y' w'Nl + (1 d) K, denote the rm's prots in the current and future periods1 respectively. The rm's value is dened by the present value of prots according to 11" V: , Tr+1+r 1where r is the real market interest rate. 2.3.) Analyze the effect of a, decrease in the future TFP [z'J on the rm's demand for investment goods. Explain in words and use diagrams to illustrate your analysis. Make sure you label everything in your graphs. (8 points) 2.1:) Find the demand for investment goods in terms of or, z', N\

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